Asked by
Amber Scott
on Oct 16, 2024
Verified
On May 1,Sellers Marketing Company received $1,500 from Franco Marcelli for a marketing campaign effective from May 1 of the current year to April 30 of the following year.The Cash receipt was recorded as unearned fees and at year-end on December 31,$1,000 of the fees had been earned.Assuming adjustments are only made at year-end,the adjusting entry on December 31 would be:
A) A debit to Unearned Fees and a credit to Cash for $500.
B) A debit to Fees Earned and a credit to Unearned Fees for $500.
C) A debit to Unearned Fees and a credit to Fees Earned for $1,000.
D) A debit to Fees Earned and a credit to Cash for $1,000.
E) A debit to Fees Earned and a credit to Cash for $500.
Unearned Fees
Income received by a company for services yet to be provided; recognized as a liability until the service is performed.
Fees Earned
Income generated from providing services or performing work for clients or customers.
Adjusting Entry
A journal entry made in accounting to record changes in revenue and expense accounts in order to match revenues and expenses to the period in which they occurred.
- Apprehend the concept of unearned revenue and its repercussions on financial statement presentation.
- Ascertain and elaborate on the call for adjusting entries and their ramifications on the accounting equation.
- Learn about the accounting treatment for unearned revenue over different periods.
Verified Answer
NF
Learning Objectives
- Apprehend the concept of unearned revenue and its repercussions on financial statement presentation.
- Ascertain and elaborate on the call for adjusting entries and their ramifications on the accounting equation.
- Learn about the accounting treatment for unearned revenue over different periods.